Asness: Some Hedge Funds Are Worth ‘2 And 20’

Oct 29 2010 | 1:48am ET

Hedge fund fees have been coming down in response to investor pressure, but clients should be willing to pay for top managers, according to one such manager.

“When it comes to fees, true skills should still be worth a lot,” Clifford Asness, founder of AQR Capital Management, said. “If there’s any problem with the hedge fund industry, it’s not that there aren’t strategies worth 2 and 20, it’s that the whole industry is being priced as if it’s skill.”

Asness told the Buttonwood Gathering that diversified hedge funds generating high returns deserve to make 2% for management and 20% for performance. According to Hedge Fund Research, the average hedge fund now charges more like 1.5% and 19%.

“The problem with hedge funds being net long is not that net long is a bad idea, it’s that they are charging 2 and 20” for investing in stocks, he said.


In Depth

An Interview With Harvest Volatility Management's Rick Selvala

Mar 23 2017 | 5:39pm ET

Several years of extremely low interest rates have pushed some investors into equities...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

SEI: Private Debt Coming Into Its Own

Mar 8 2017 | 9:24pm ET

The explosive growth of private debt over the past few years has caused the lines...